trading Crypto Futures 3#: Update of my journey

This post is part of my trading crypto futures series. I update you on my progress to become profitable. It consists of a section where I show you how to do something regarding trading. My results since the last update and finally a section of lessons learned. My goal is to take you with me on my journey to success.

How to draw key levels into the price chart

Drawing key levels in the chart is an iterative process. You will draw them based on what you see. Sometimes you get the wrong idea and will have to adapt. Other times you will observe how the price beautifully bounces from your lines on the chart, just like they were real physical objects. Finding good key levels in the chart empowers you to find:

  • Support/Resistance
  • Trend channels
  • Trading Ranges

The rules for drawing such lines are quite simple: try to match as many candles as possible. This alone will make you find Support and resistance and even trading ranges. Trading ranges are applicable in times of sideways movement if no clear bias is detectable.

Drawing a channel for a downtrend is done by identifying a local top from which the price moves downward. Make the line connect the tops of the first two swing highs. When you get a third swing high, that matches your line, you have approval for your trend channel. The same is true for an uptrend.

So this is how I draw trend channels:

First I draw a line, that starts from the candle where the price moves in a direction (up or down), I angle the line in such a way that I find a second ( and third) corresponding swing. Then I copy this line and move it to the top ( or bottom) of that channel, making it cross as many as possible candles in the opposite direction. 

To be explicit: 

Drawing uptrend channel

  • Draw the line at the bottoms of the candles
  • Copy this line
  • Move the copy such that it aligns with as many candle tops as possible

Drawing downtrend channel

  • Draw the line at the tops of the candles
  • Copy this line
  • Move the copy such that it aligns with as many candle bottoms as possible

Here is how I draw Key Levels in general

First I pick a high timeframe today I used 8H, but sometimes I use 2H or 1H. I am looking for longer-term trends and levels. This is what I found:

Then I would inspect the 15m timeframe of BTC/USDT for any trends, support and resistance, or trading ranges. Today I found a trading range, that was currently in play.

After this analysis, I switched to my trading timeframe, which is 3m or 1m ( I am not sure which one I prefer yet). 

The last image shows you my trading timeframe, I drew two channels. The first was an uptrend, that has had an overshoot. And the second one was a downtrend. It formed due to the overshoot and rejection at the 15m trading range top. I was prepared to go short after seeing this and the fact that we had touched the 8H downtrend channel top was confirming the same. After the price was rejected by the 15m trading range support I was committed and entered my short. 

I got a beautiful scalp there, clean no fear, no pullback, just beautiful! You can see that the price bounced from the channel bottom (my take profit) and still moved accordingly, even though it looks like we entered a small trading range again.

New visualization of trade days

Because I tend to forget the distribution of winning and losing days, and how much profit I made. I created a little tool to generate a compact visualization of my trading days. It includes the number of trades and how much profit I made. Based on the profit the background will be colored. Green for a winning day, red for a losing day, and white for a day with no trading at all. 

This will give you and me a fast measure of how I performed in the last month of trading crypto futures. Additionally, I will more easily recognize 5-day-streaks of either winning or losing. Which, by following our rules, will result in increasing or decreasing the leverage used.

You will get to see the mentioned graphic in the next section.

My results of trading BTC futures the last month

Start balance $62.68
End balance $63.00
Savings account$16.52
Amount traded $12,069.00
Win rate 37.93%
Green/White/Red days 6/ 6 / 24
Statistics 1 month trading crypto futures
Trade days of August, visualizing the days of win, loss, and no trades.

As you can see, I kept to my word and reduced the leverage to 5. Because of the low leverage and the small balance, wins and losses, in regards to profits, were almost meaningless. But this has been liberating. It freed me from FOMO because even if I missed a trade I would have missed a few cents of profit. Losing wasn’t tough either, the most loss was due to the commissions of market orders (the SL-Order is a market order). This empowered me to harden my mindset and trade for trading crypto futures and not to getting rich fast.

I had quite a low win rate and traded only a few days. This is discussed in my other post. In a nutshell, I have little time and when I have time the market is quite flat. But I will make it work!

Lessons learned

As always, here are lessons learned trading BTC/USDT Futures. If you have any questions, feel free to get in touch with me.

Never keep orders open while away from the screen

On August 29th I was trading while working on something else. Switching back and forth between trading and the other context. I did my analysis and was anticipating a sell opportunity coming soon. I saw this chart:

I reasoned that we have been rejected multiple times at the 200 MA. The chart was giving me a double top and it looked like a downtrend was in play. But I wasn’t fully convinced yet and was waiting on confirmation in the form of a clear failed second entry long. Because my other task needed my attention I moved my entry even further up to be ‘sure’ it would not trigger unintentionally and even if ‘it would reverse’ because the price never touched my new entry in five days.

Shortly after, while I was away from the screen breaking news came out and my order got filled. I wasn’t paying attention for some hours, which is madness, to be honest, and when I remembered my open short I was shocked! This is what I saw:

I was confused because I hadn’t heard of the news yet and believed the reaction was some overreaction due to broken supports of some sort and was hoping to see a V-Top-Pattern to exit the trade even in a loss. I was negotiating with myself all the time and was afraid that I lose even more.

However, after research, I found out that the news was about the lawsuit of Grayscale and the SEC. But it only implied that the SEC was not right in rejecting the Bitcoin Spot ETF of Grayscale. But people were interpreting this way too bullish for all Spot ETFs (Blackrock and Co.). Additionally, at the 1D chart, we were near the 200MA, from below, I hoped that we would get rejected when hitting this resistance. I am not sure if this reasoning was ok but it happened and I got lucky and sold in profit on September 1st. The image below illustrates the entry and exit in 8H timeframes to make you see the entire trade.

Looking at the chart in hindsight, you will be able to see that a bart-pattern formed. 

To conclude this rollercoaster of a trade: Never keep entries open when leaving the screen, even if you move the entry far enough. You never know what happens next. I got lucky there but missed a lot of opportunities and it could have ended badly too.

Conclusion trading crypto futures

This time, the lessons learned section has only one item. This is because I am a little short on time. My mantra has become to do something regularly instead of a lot and then pause for a longer time and lose motivation because doing something means too much effort. 

Currently, I do read the book trading in the zone. This book is highly recommended by a lot of profitable traders. It tackles the profession of trading from the psychology part. The link is pointing to a book, but there is an ebook version too. This gives you the chance to “read” the book while doing dishes or working out, which I like a lot. I especially like that the author uses everyday analogies to make his statements clear. In the future, I will create a post that summarizes what I took from this book.

I hope that you, by reading this blog post, can grow and improve your trading. I am trying to update you on my progress in trading crypto futures profitable at the beginning of each month. Currently, I am developing the tools and mechanisms to do this efficiently, Thank you for reading my content!

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